Basic state pension rules as government announces major changes

Plans have been announced by the government to change how state pensions for expats will be calculated from next year.

The upcoming changes, which come into effect from January 1, 2022, will affect all Brits intending to retire abroad.

The biggest change will affect whether a person qualifies for a state pension or not.

UK citizens living in Australia (before March 1 2001), Canada or New Zealand will no longer be able to count the time they spent abroad as a qualification period for the state pension, under the new rules.

State pensions are just one of the key financial preparations that you need to carry out if you’re preparing to emigrate, finance experts at money.co.uk explain.

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James Andrews, senior personal finance editor at money.co.uk, said: “The recent changes to state pensions serve as a timely reminder that you have to put a comprehensive financial plan in place if you’re intending to retire abroad.”

He added: “For starters, the process of moving your money overseas can take quite some time, so it’s best to start as early as possible.

“In some countries for example, you can’t even set up a bank account without a residential address there, so it might be worth applying for a prepaid travel card or current account to act as a stop-gap while you sort out the Ts and Cs.

“The quickest and easiest way to get an overseas bank account set up is to speak to your existing bank to see if they have a presence abroad – it’ll make moving your money to your desired country much easier.

“The other issue that needs careful consideration is your credit history.

“When you emigrate, your credit history unfortunately doesn’t move with you – meaning you’ll be starting completely from scratch.

“In practice, this will likely mean a massive reduction in your borrowing potential, so you need to have a plan in place in case of unexpected bills. Since you might not be able to rely on a credit card or qualify for a loan, it’s a good idea to have some emergency funds in place to see you through any financial difficulties.”

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